State and Local Trends and Innovations

1. State and Local Trends and Innovations Elizabeth Kellar, President/CEO Center for State and Local Government Excellence www.slge.org

2. Is the glass half full – or half empty?

3. The Current Picture Sustained fiscal constraints for states and localities But some places have recovered Growing intergovernmental tensions Looming workforce challenges Federal deficit Public sector bashing Historic political changes

6. State and local government wages grew more slowly; corrections costs outpaced personal income over the past 30 years (GAO) Major employer (about 14 percent of total U.S. employment) Key contributor to GDP (about 12 percent of GDP through more than $2 trillion in operating and capital expenditures) Recipients of about $500 billion in federal grant funds in 2009 6 GAO

7. The Public Manager’s Worries (a partial list) • Services squeezed; infrastructure needs • Rising costs for pensions and retiree health care liabilities • Competition for resources • Aging population • Medicaid costs • And there’s a quiet talent crisis that is not on the radar screen

8. Promising Innovations and Trends • Regional thinking & shared services • Technology (laptops for social workers) • 45 state legislatures have adopted significant pension legislation • Sentencing reform • New urbanism; multi-modal transit • Wellness programs; chronic care management; walkable communities

9. 2012 State and Local Government Workforce Trends • 51% - pay freezes • 42% - hiring freeze • 22% - layoffs An improvement over 2011

10. Older, more educated workforce --who is in the pipeline? Median age: 39 for private sector employees 44 for state and local employees Knowledge workers (jobs require specialized training, education, skills): 30% of the private sector 70% of state and local government workers SLGE

11. Competing for Talent • Highly educated specialists are in greatest demand – and the list is growing • Changing economy requires different skills • Attracting and retaining talent requires changes in recruitment practices, incentives for older workers, and staff development • Does our compensation package work for the diverse needs of our workforce?

12. Retirement picture

13. Retirement plan changes For new hires: • 27% increased employee contributions • 20% increased age and service requirements • 8% decreased pension benefits • 8% reduced or eliminated COLA • 7% increased employer contributions • 6% increased vesting requirements

14. Retirement plan changes For current employees: • 24% increased employee contributions • 8% increased employer contributions • 6% eliminated or reduced COLA • 4% decreased employer contributions • 4% increased age and service requirements

15. Health Care Plans: 59% report changes

16. Public workers have better benefits, but their wages are lower • Wage penalty of 9.5 percent • Total compensation 4 percent less • Managers have greater wage penalty • High school educated workers do better • Health care costs a huge concern (active and retired employees) • Few legal protections for health benefits

17. Government Job Losses Outpace Other Sectors

18. Shedding Jobs and Expertise “Government Getting Smaller in the U.S.” NY Times, May 4, 2012 Over 600,000 local government jobs lost, including education Over 121,000 state government jobs lost, but states are starting to hire slowly CALPERS reports that state retirements were up 18% in 2009 compared with 2008; and up 22.6% in 2010; WI retirement applications up 79%; Ohio up 27% NJ teacher retirements up 95% last year; NY up 65%; NJ state worker applications up 60%

19. NCSL Deficit Reduction Priorities • Impose no new unfunded mandates • Provide relief from Medicaid requirements to maintain level of effort • Fund infrastructure at level sufficient to continue economic benefits • Uphold state authority in areas like medical malpractice • Enact Marketplace Fairness Act

20. Questions? The Center promotes excellence in local and state governments to attract and retain talented public servants. Research and promising practices http://slge.org